Newly hired? Know your tax bills

Most new employees would benefit from an onboarding program that includes information about claiming reimbursement for out-of-pocket expenses, pension contributions, or how to deduct non-reimbursable expenses. Here is the first book to share.

Tax credit for every job

A refundable tax credit is available to all individuals reporting employment income. It is called the Canada Employment Allowance and is required without receipts to reduce taxes paid. It includes the cost of traveling to and from work, or other personal work expenses, such as buying lunch, new shoes, dry cleaning and more.

In 2026 the maximum claim is $1,501 in federal tax refunds.

What tax forms are required?

Employees who receive additional out-of-pocket expenses as a condition of their employment contract will need additional forms:

Allowable deductions vary slightly from sector to sector. Those earning commissions can claim an additional deduction for those earning a salary only. Eligible teachers, truck drivers, artists, musicians, forestry workers, independent workers, and some working and construction workers can apply in various nuances.

Some claims are limited to work income (or commissions earned). Some are eligible for white carry forwards and others are not. A common thread? In each case, receipts, logs, and information are required, as well as confirmation from the employer that the expenses are necessary and any reimbursement amounts.

Travel expenses

Travel expenses are only claimed if:

• The employee had to pay their own expenses and was not reimbursed (or was paid a reasonable tax-free allowance)
• You were often required to work away from your employer’s place of business or at different locations
• Keep records of trips and expenses
• You have a completed Form T2200

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All of the above conditions must be true, if so, the following expenses are allowed:

• Travel costs for bus, train, flights, Uber if you are traveling outside the metropolitan area
• The cost of the vehicle, which can include operating costs and fixed costs such as capital cost allowance (CCA), lease and interest costs.
• Truck drivers – Expenses incurred by employees of a transport company for food and accommodation, while away from the employer’s premises and the main city (form TL2)
• Railway Employees – Expenses received for meals and lodging when not in the taxpayer’s usual place of residence, municipality and metropolitan area.
• Flying expenses required for work

Eating while traveling

The rules surrounding food are complex and not understood by many workers. You must be away from your employer’s workplace for at least 12 consecutive hours to deduct the expense—and even then, only 50 percent of food, entertainment, and beverage expenses are allowed. There are exceptions depending on your role.

Note the size of the details: Long haul truck drivers who drive trucks or tractors weighing more than 11,788 kg. moving goods at least 160 kilometers from the employer’s place of business can cost 80% of the cost of food and beverages if you travel for 24 hours or more.

Some fun facts: With receipts, truckers who sleep in their cabs can deduct shower expenses along the way. There are both simplified (cost per meal) and more detailed (keep all receipts) debit options available.

Commissioned salespeople can demand more than salaried employees. Marketing expenses such as marketing, gifts, and promotional expenses may be claimed, but cannot exceed commissions earned (unless claimed under travel expense options).

There is a big tax pitfall, however. Employed salespeople are subject to the same 12-hour rule as other employees.

Cost of home workspace

These expenses are claimed if the employee has worked without them for more than 50% of a period of 4 consecutive weeks in order to earn their employment income. The space must be used for frequent and continuous contact with clients, customers, or others during employment activities. In practice, this can include online meetings. Costs should be calculated on the area of ​​office space used as a percentage of all other space, including hallways, bathrooms, and kitchens.

Salaried employees can make this claim, but be aware: insurance costs, property taxes, interest, and capital expense allowances are only claimed by authorized employees.